The rise and fall of Arab industry

After the fall of the old regimes in several Arab countries, the new ruling forces have been calling for the establishment of industries that promote the development of the people.

al-monitor An Egyptian peasant works in a field at Giza with pyramids in the background, Jan. 1, 1950. Photo by Three Lions/Getty Images.

Topics covered

industry, economy, economics, development, agriculture sector, agriculture

Apr 10, 2014

During the past 60 years, politicians in various Arab countries have raised the importance of establishing industries aimed at moving their economies from a stage of underdevelopment to one of development and modernization.

This issue has actually played a pivotal role in the political and social changes that occurred. The media outlets representing the various political forces kept portraying this matter as the savior of the Arab peoples from the clutches of ignorance, backwardness and modest living standards.

Following the success of a number of military coups in countries such as Egypt, Iraq, Yemen and Sudan and after Algeria’s independence and the Moammar Gadhafi coup in Libya, the new ruling regimes continuously accused the old regimes of promoting economic underdevelopment and neglecting industrial development that could have achieved self-sufficiency for these countries and liberated them from their dependency on colonial economies. Other suggestions were also marketed to the Arab masses that are dying to get rid of underdevelopment, poverty and unemployment.

In the early 1950s, the Arab economies were undoubtedly dependent on agricultural production and export of raw materials. Some countries, such as Egypt and Syria, have been able to benefit from the exports of cotton. Iraq, for its part, exported dates and grains while Sudan managed to develop the livestock market and export its production to some extent. Moreover, a number of Arab countries such as Iraq, Saudi Arabia and Kuwait started exporting crude oil to the world after they agreed on production operations with American, British and French oil companies.

But how does the manufacturing story in the Arab world begin? Have the policymakers in countries such as Egypt, Iraq, Syria and Algeria, among others, chosen the appropriate manufacturing industries? It is known that the manufacturing philosophy has focused on the importance of heavy industries such as iron, steel and aluminum, which were subsequently joined by petrochemical industries. These countries, however, have failed to verify the industries’ suitability for the requirements and standards of comparative advantage.

Many of the established heavy industries have consumed energy and efforts without being of economic importance, and many other industries have failed to be up to the competition with foreign products that enjoy appropriate economic costs with unmatched high quality. In addition, those industries have exhausted governmental and non-governmental funds in more than one Arab country. They required high levels of support and protection that entailed significant economic costs.

Therefore, industries in Egypt, Algeria, Iraq and Syria have not been able to achieve sovereign revenues to improve their balance of payments. Costly industries, such as the auto industry, have been established. These, however, failed to dispense the country with imported cars. In the midst of the prevailing political totalitarian tendency, businessmen and economists could not put forward rational views to shift the rulers’ tendency toward industry, as no one wanted to listen to technical opinions or views.

In the past, significant industries were established in a number of Arab countries to take advantage of the available raw materials and cheap labor. The textile industry was among those appropriate industries in both Egypt and Syria, and both countries have succeeded in occupying important positions in the cotton and textile export market. The same applies to the production of citrus fruits and other foodstuffs.

In addition, oil refineries were essential in oil countries where there are raw materials and where costs can be controlled so as to export refined products and derivatives at competitive prices. Linking the industry to the raw materials sources leads to creating a more effective economic environment and higher chances of success. Moreover, the irresponsible attention that was given by politicians to manufacturing led to neglecting or even ruining the potential that is available in other sectors.

Chief among the sectors that have suffered these blatant trends is the agricultural sector. This sector could have been able to increase its contribution to the GDP in Egypt, Iraq, Sudan and Syria, had it been given sufficient governmental funds to employ new production mechanisms and upgrade the technologies used in this sector. In addition, it could have been more productive had the governments worked on improving the working conditions of farmers and immunizing the services required by the enhancement of health care and education so as to raise the level of their life quality.

Linking agricultural production to industries that depend on the nature of this production output served as a guarantor to promote the competitiveness of the mentioned countries in the export markets. Add to this the interest in agriculture that was going to lead to self-sufficiency in basic commodities, especially food, and reduce the import bill.

The final results of the political changes in the Arab countries are yet to be known. However, in order for any new political system to prove its legitimacy, it ought to establish appropriate economic programs. Therefore, these systems ought to focus on achieving benefits out of the various economic activities. Also, the focus on the industry ought to be based on realistic data that lead to the achievement of the desired results and the establishment of industries with economic feasibility.

There is no point in establishing industries that may not be feasible or capable of achieving sovereign revenue or work according to economic criteria, including the use of key resources, national human capabilities and material resources.

The needed industries ought to enhance the possibilities of taking advantage of the capabilities of both the public and private sectors. The manufacturing process ought to lead to the integration of operations between the key sectors in any of the Arab countries, lead to efficient capital investment and enhance the possibilities of creating employment opportunities in various economic sectors.

Continue reading this article by registering at no cost and get unlimited access to:
  • Al-Monitor Archives
  • The Week in Review
  • Exclusive Events
  • Invitation-only Briefings

More from  Amer Thiab al-Tamimi

Recommended Articles

Rouhani: Iran’s economy handled pandemic better than US
Al-Monitor Staff | Coronavirus | Aug 4, 2020
Can Jerusalem mayor improve situation of Arab residents?
Danny Zaken | Israeli-Palestinian conflict | Aug 3, 2020
Iranian supermarket opens in Venezuelan capital
Al-Monitor Staff | Iran-US tensions | Jul 31, 2020
Nile dispute no closer to being resolved, despite African Union mediation
Week in Review | Water Issues | Jul 24, 2020
Mosul sowing seeds post-Islamic State
Hassan Ali Ahmed | Agriculture and farming | Jul 21, 2020